Published on 30 Aug 2019.
RAM Ratings has reaffirmed the AAA/Stable rating of Cagamas MBS Berhad’s RM2.06 bil residential mortgage-backed securities (2005/2025) (CMBS 2005-2). Cagamas MBS is a limited-purpose entity incorporated for the purpose of securitising government staff housing loans (GSHLs) and government staff Islamic home-financing facilities.
The rating reaffirmation reflects the fully cash collateralised position of the outstanding RM650 mil CMBS 2005-2 as at end-September 2018. As at the same date, the transaction’s RM754.39 mil of cash and permitted investments were more than sufficient to meet the remaining RM650 mil outstanding balance of CMBS 2005-2’s last two tranches and ongoing interest obligations up to their respective maturity dates. This is attributable to the portfolio’s better than expected performance since issuance, which has helped it accumulate cash reserves. While the transaction allows a partial redemption of the last two tranches of CMBS 2005-2, this option has not been exercised as cash flow arising from excess prepayments has yet to meet the projected amounts, despite having fulfilled the minimum threshold of RM90 mil for the Collections Account. CMBS 2005-2’s portfolio of GSHLs comprised 26,151 accounts, with an average outstanding amount of RM34,954. The weighted-average term to maturity of the CMBS 2005-2 pool stood at 7.93 years.
Under the Budget 2019, civil servants (grade 54 and below) and pensioners received a one-off special payment of RM500 and RM250, respectively, while pensioners receiving pensions of less than RM1,000 were paid an additional one-off assistance sum of RM500. In addition, the government introduced the Bantuan Sara Hidup programme early this year – a tiered cash hand-out scheme depending on the income level of eligible person. That said, we observed no significant impact on current prepayment levels, likely due to the subsidised interest rates of GSHLs as well as persisting inflationary pressures and affordability issues. While the new administration has provided an assurance that the civil service will not be downsized, there had been proposals to reshuffle and reassign civil servants at all levels, which could result in higher incidences of transfers and, in turn, possibly more administrative delays in deductions. During the review period, the respective delinquency profile of portfolios under Cagamas MBS Berhad were generally stable.
Tan Han Nee
(603) 3385 2529
(603) 3385 2577
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Ratings on Cagamas MBS Berhad CMBS 2005-2